Banks & Fintech Fight for Paylater Business
Competition for market share promises that the paylater business is not only controlled by fintech companies, but also by conventional banks.
The business of providing delayed payment services, aka buy now pay later (BNPL/paylater) is increasingly being loved and has become a strategic step as a new source of income for a number of companies. Based on the DSResearch Fintech 2021 report, paylater occupies the third position as the most favorite service after e-money and investment applications in 2019. Interestingly, a year later, in 2020 paylater rose one notch to rank second right below electronic money. Several factors that encourage this are because the loan gap in Indonesia is still significant, while credit card penetration is still low at 5%. The next factor is the growing trend of Indonesian e-commerce consumers from year to year which continues to increase. McKinsey in his report stated that the e-commerce industry in Indonesia is projected to be worth US$40 billion by 2022. Almost all e-commerce platforms in Indonesia adopt the BNPL checkout method by partnering with various financial technology/fintech providers. according to a report from Worldpay, the payment processing company owned by FIS, recorded global e-commerce transactions reached US$4.6 trillion in 2020, up 19%, from 2019. Paylater accounted for 2.1% or about US$97 billion of that amount. This figure is expected to double to 4.2% by 2024. Changing consumer spending habits and a surge in e-commerce adoption are giving the market a significant boost. This is an advantage for a number of companies. Digital economy researcher from the Institute for Development of Economics and Finance (Indef) Nailul Huda agrees that the increase in online shopping has indeed encouraged various services to enter the e-commerce ecosystem, from logistics to payments.
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